Quantitative Methods
Assignment – 1
Q1:
Understanding and Usage of Formula:
To test whether the new proportion is significantly different, we use the Z test for proportion.
Formula for Standard Error:
𝑝(1 − 𝑝)
𝑆𝐸 = √
𝑛
Formula for Z-score:
𝑝̂ − 𝑝
𝑧=
𝑆𝐸
p = population proportion = 0.30
p̂ = sample proportion = 0.40
n = sample size = 100
Procedure:
Step 1 – Hypothesis
𝐻0 : P = 0.30
𝐻1 : P ≠ 0.30
Step 2 – Sample Values
n = 100
𝑃̂ = 40/100 = 0.40
P = 0.30
Step 3 – Calculate Standard Error
SE = √[(0.30 × 0.70) / 100]
SE = √(0.21 / 100)
SE = √0.0021 ≈ 0.0458
Step 4 – Calculate Z Value
z = (0.40 − 0.30) / 0.0458
z ≈ 2.18
Step 5 – Critical value
At 5% significance level (two-tailed):
Z critical = ±1.96
Correct Answer & Interpretation
|2.18| > 1.96, we reject the null hypothesis.
Conclusion: The increase from 30% to 40% is statistically significant.
This means the change in student preference is real. The university can consider increasing
Chinese food options.
Q2 (A)
INTRO
In this case, the retail chain is trying to understand customer behaviour using probabilities
from a contingency table. The main problem is whether simple probabilities are enough, or
some deeper analysis like conditional probability is also needed. Also, they need to decide
that gender and purchase frequency are related or independent. This directly affects how
accurately they can target customers.
BODY
Marginal Probability
Marginal probability looks at one variable like:
Probability of Male customers
Probability of a customer making frequent purchases
Advantages:
Simple and easy to calculate
Gives overall distribution of customers
Useful for general planning
Disadvantages:
Ignores relationships between variables
Not useful for targeted marketing
Note: Marginal probability is good for overview, but not for segmentation.
Joint Probability
Joint probability looks at the combined occurrence of two events, like:
Probability of a male customer making frequent purchases
Advantages:
Shows interaction between variables
Helps identify key customer segments
Disadvantages:
Still limited in explaining causes
Harder to Consider for decision-making
Useful for identifying segments, but not enough for Accurate targeting.
Conditional Probability
Conditional probability shows the probability of one event given another, like:
Probability of frequent purchases given the customer is female
Advantages:
Most useful for targeted marketing
Helps understand behaviour within specific groups
Improves accuracy and personalization
Disadvantages:
Slightly complex to calculate and interpret
Requires accurate data
Best tool for segmentation and campaign decisions.
Dependence vs Independence
If dependent, gender influences purchases → targeted campaigns
If independent, gender doesn’t affect buying behaviour → generic campaigns
In real life, customer behaviour is rarely independent. There are usually patterns. So,
assuming independence can lead to wrong decision making.
CONCLUSION
Marginal and joint probabilities are useful for basic understanding, but not enough for
targeting. Conditional probability gives the real output needed.
The company should treat gender and purchasing behaviour as dependent and use conditional
probability. This will improve targeting, save budget, and make campaigns more effective.
Q2 (B)
Understanding & Usage of formula
We use the Z score formula for normal distribution:
Z = (X − μ) / σ
X = 180,000
μ = 150,000
σ = 20,000
Procedure
Step 1 – Calculate Z Score
Z = (180,000 − 150,000) / 20,000
Z = 30,000 / 20,000
Z = 1.5
Step 2 – Find Probability
From standard normal table:
P (Z < 1.5) = 0.9332
We need:
P (X > 180,000) = P (Z > 1.5)
So,
P (Z > 1.5) = 1 − 0.9332 = 0.0668
Correct Answer & Interpretation
Final Probability = 0.0668 (6.68%)
This means only about 6.68% of stores earn more than $180,000 per month.
Out of 250 stores, this is approximately 17 stores.
Managerial Interpretation:
Very few stores reach this level of sales
Premium category includes only top performers
Conclusion:
The premium threshold appears too strict, since less than 10% of stores qualify.
Management should consider for revising the target or focusing on improving selected stores.